Customer Lifetime Value (LTV) Calculator
Enter your average revenue per account, gross margin and monthly churn. You get the lifetime value of a customer, and if you add what it costs to win one, the LTV to CAC ratio and the months it takes to earn that cost back.
MRR divided by paying customers.
What is left of revenue after hosting, support and payment fees.
Customers lost in a month, divided by customers at the start.
Sales and marketing spend divided by new customers. Leave empty to skip the ratio.
- Margin from one customer: $3,200 by month 40, the average lifetime
- Cost to acquire, $800: earned back in month 10
- $100 × 80%= $80 margin a month
- 1 ÷ 2.5%= 40 months
- $80 ÷ 2.5%= $3,200 LTV
- $3,200 ÷ $800= 4.0 to 1
- $800 ÷ $80= 10 months payback
Lifetime value is monthly margin per account, divided by monthly churn.
LTV = ARPA × gross margin ÷ monthly churn rate
average lifetime in months = 1 ÷ monthly churn rate
Dividing by churn is the same as multiplying by how long an average customer stays. At 2.5% monthly churn, the average customer stays 1 divided by 0.025, which is 40 months.
The calculator starts with $100 of ARPA at 80% gross margin, which leaves $80 a month. Over 40 months that is $3,200 of lifetime value. Without the margin step, lifetime revenue is $4,000.
The LTV to CAC ratio is lifetime value divided by the cost of winning the customer.
LTV to CAC = LTV ÷ CAC
CAC payback in months = CAC ÷ (ARPA × gross margin)
With a CAC of $800, the example ratio is $3,200 divided by $800, which is 4.0 to 1. The $80 of monthly margin pays the $800 back in 10 months.
A widely repeated guideline is a ratio above 3 to 1. David Skok's SaaS Metrics 2.0 puts it this way: "the best SaaS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8", and many "are able to recover their CAC in 5-7 months".
Source: David Skok, "SaaS Metrics 2.0", For Entrepreneurs, first published January 2013, read 13 October 2026.
Churn moves lifetime value more than any other input.
Churn sits under the line, so halving it doubles lifetime value: at 1.25% monthly churn the same customer is worth $6,400. Raising price or margin by a tenth raises lifetime value by a tenth.
| Monthly churn | Average lifetime | Lifetime value |
|---|---|---|
| 1% | 100 months | $8,000 |
| 2% | 50 months | $4,000 |
| 2.5% | 40 months | $3,200 |
| 3% | 33.3 months | $2,667 |
| 5% | 20 months | $1,600 |
| 10% | 10 months | $800 |
- Keep the periods the same. Monthly ARPA goes with monthly churn. Mixing a monthly price with a yearly churn rate makes the answer 12 times too large.
- Use customer churn here. The formula counts how long an account stays, so it needs the share of accounts that leave, not the share of revenue.
- Recalculate when churn moves. The formula treats churn as flat for the whole lifetime. New accounts often leave faster than old ones, so a group of new customers can be worth less than the average.
If you sell through a free trial, CAC falls when more trials pay, because the same spend is spread over more customers. 1Capture works on that step by verifying a payment method when the trial starts. The churn rate calculator gives you the churn number this page needs.
People also ask these questions about customer lifetime value.
How do you calculate customer lifetime value for a SaaS business?
Multiply average revenue per account (ARPA) by gross margin, then divide by the monthly customer churn rate. With $100 of ARPA, 80% gross margin and 2.5% monthly churn, that is $80 divided by 0.025, which is $3,200.
What is the LTV to CAC ratio?
It is lifetime value divided by customer acquisition cost: how many dollars of margin a customer brings for each dollar spent to win them. An LTV of $3,200 against a CAC of $800 is a ratio of 4.0 to 1.
What is a good LTV to CAC ratio?
A widely repeated guideline is a ratio above 3 to 1. David Skok's "SaaS Metrics 2.0" puts it this way: "the best SaaS businesses have a LTV to CAC ratio that is higher than 3, sometimes as high as 7 or 8" (For Entrepreneurs, first published January 2013, read 13 October 2026).
Why does the LTV formula use gross margin?
Because only the margin is left to pay back the cost of winning the customer. Revenue spent on hosting, support and payment fees is gone. Without the margin step the example customer is worth $4,000 in revenue. With it, $3,200.
What is CAC payback period?
It is the number of months of margin from one customer needed to cover what it cost to win them: CAC divided by ARPA times gross margin. A CAC of $800 against $80 of monthly margin is paid back in 10 months.
Is this the same LTV as loan-to-value?
No. In lending, LTV means loan-to-value: the size of a loan against the value of the home or car it is secured on. This calculator works out customer lifetime value, the margin a subscription business earns from one customer over the time they stay.
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